UK equity funds enjoy July revival ahead of August uncertainty

The figure was driven by continuing investor preference for funds targeting UK Equity Income, which was the top-selling sector with net sales of £611m – almost double the £367m that flowed into second-placed Europe ex UK.

Having been first in the June sector sales list, Targeted Absolute Return dropped down to third on £322m, while Property and UK All Companies completed the top five with £293m and £281m.

The UK also featured at the top of the regional sales rankings with £943m net during the month, followed by Europe and Global on £532m and £338m respectively.

“Following investor hesitancy seen so far in 2015, confidence returned in July with the highest net retail sales for over a year,” commented Daniel Godfrey, IA chief executive.

“Although it remains to be seen what impact August’s volatility has on fund sales, retail investors had a strong appetite for equities in July, particularly UK equity funds.”

Despite the healthy figures, gross retail sales both via fund platforms and direct were down year-on-year, registering market shares decreases of 8.5% and 0.1% in the past 12 months.

Fund platforms – which include Cofunds, Fidelity, Hargreaves Lansdown, Old Mutual Wealth and Transact – saw July sales drop 54% year-on-year to £255m.

Conversely, intermediaries such as wealth managers, stockbrokers, IFAs and discretionary fund managers saw gross retail sales of £6.4bn lead to a 9.4% market share increase, rising to 42.4% overall.

Tracker funds have also enjoyed the past 12 months, with a market share rise from 10.7% to 12.3% stemming from July net retail sales of £491m taking total FUM in the space to £107.2bn at the end of the month.